The latest report on inflation in the U.S. revealed the consumer price index rose 8.3% compared to last year. Considering a slight decrease in the cost of gas as of late, some anticipated the rate of inflation number from the Bureau of Labor Statistics would be considerably lower than 8.3%.
President Biden believes the prices Americans have been facing “have been essentially flat”, which some could accept if they viewed the inflation numbers from a month-to-month perspective: The increase in CPI was just 0.1% from July.
Wall Street did not take that perspective when the Dow, the S&P 500 and the Nasdaq Composite on Tuesday suffered their worst daily drop since June 2020.
On the Newell Normand Show, Normand described the Biden Administration’s
rosy outlook on the latest inflation report as “smoke screening.” Mark Hamrick, senior economic analyst with Bankrate.com, joined Normand for Thursday’s show. Hamrick said most Americans have a more realistic understanding of how inflated prices have been playing out.
“Americans are downbeat with respect to the current situation. If one looks at
consumer spending to the consumer sentiment measures that we watch very
closely and our own Bankrate surveys show a majority of Americans have been downgrading their own discretionary spending so they can focus on necessities. So, in terms of the economy inflation is the number one theme of the day and that is a big negative for the economy,” Hamrick told Normand on Thursday.
Hamrick also advised against narrowly viewing the recent and relative dip in gas prices. While fuel prices such as $3.10/gallon at the gas pump may seem
attractive, the current prices compared to those of a year ago tell a more
complete and sobering story of the rise in fuel cost. Hamrick warned that more possible sticker shock with fuel prices is likely to come as we draw nearer to the colder months of the year.
Click above to listen to what some of the other economic indicators he’s keeping an eye on as the next round of interest rates are anticipated.
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